When it comes to property taxes in the U.S., often you are blessed and cursed.
In a rising market, the local assessor will raise his estimate of your home’s worth, which usually results in a higher real-estate tax bill. Your property taxes, particularly in a high-growth area, then pay for new schools, fire and police stations and other public services.
Yet the price of growth can be burdensome when property taxes outpace the rate of consumer inflation or income growth. Anyone who lives in New Jersey, Florida, Illinois — or any area where real-estate values have jumped dramatically — can attest to this often negative reality of homeownership.
Tax revolts from North Dakota to Florida have proven one thing: If you lower the local tax bill, you still need revenue from other sources. You end up swapping one levy for another.
Nowhere has the burden incensed more taxpayers than in New Jersey. The state has the dubious honor of having the highest property-tax bills in the country, averaging $6,300 last year, a 7 percent increase over 2005.
After years of citizen activism in New Jersey, a recent proposal called for a 20 percent reduction in property taxes in exchange for higher state sales taxes, estimated to cost the average household an additional $275 a year, according to Citizens for Property Tax Reform, a state taxpayers group.
“This is neither relief nor reform,” says Cy Thannikary, chairman of the Allentown, New Jersey-based group, which claims to represent 500,000 homeowners and 57 community organizations. “The reduction is not constitutionally guaranteed.” The Garden State collected almost $21 billion in property taxes last year where local levies are twice the national average.
Homeowners just can’t keep up with property-tax increases in many states. From 2000 to 2004, personal income grew almost 16 percent while property-tax collections increased about 28 percent, according to the Tax Foundation, a Washington-based educational organization.
That’s why tax revolts have spread across the country and are gaining momentum.